EDITOR: | March 3rd, 2014 | 4 Comments

Tesla’s batteries to transform the U.S. domestic power sector

| March 03, 2014 | 4 Comments
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News flash: when it comes to electric cars, America is way out front of China ― at least in the first round.

Lithium-Ion Battery CelleSecond news flash: the lithium-ion batteries to be manufactured by Tesla and Panasonic for electric cars may also change the way Americans (and others) use electric power at home.

Contrast these: California-based electric-vehicle maker Tesla Motors has seen its stock climb by 619% in a year, and now has hit the stratosphere with its plans to construct a battery “gigafactory” making lithium-ion batteries for its (and other makers’) electric cars, initially for its own Roadster model. Meanwhile, in China the Beijing-based Caixin news service posts a headline reading “Electric Car Charging Stations Powering Down”.

Both items have profound implications for lithium-ion batteries, and therefore lithium and graphite (not to mention all the other rare and critical metals that go into electric and hybrid cars from magnets to auto bodies). Tesla had made its intentions plain: as it states, “nickel metal hydride (NiMH) batteries are commonly used in hybrid cars. However, a 56 kWh NiMH battery pack would weigh over twice as much as the Roadster battery. Instead, Tesla uses lithium-ion battery cells which dramatically decrease the weight of the Roadster pack and improve acceleration, handling, and range“.

But the news that has ‘electrified’ the market is the announcement that Japan’s Panasonic and Tesla Motors are in talks to build a $2 billion automotive battery plant in the United States. Panasonic is inviting several other Japanese materials makers to join the project, which aims to lower the cost of lithium-ion batteries. Apart from Tesla, Toyoto and other Japanese automakers might also be customers of the new plant, which is due to begin production in 2017.

The key: Tesla’s plan is to bring down the sticker price of electric cars to be more in line with petrol and diesel vehicles. If that was achieved, it would transform the electric car market and — more importantly so far as we are concerned — transform the lithium and graphite industries, remembering that graphite content of these batteries can be up to 20 times the content of lithium. (And also remembering that the use for these new-age materials is growing exponentially, the latest developments including a water-heater than uses graphite rods to warm the water and means drastically reduced electricity charges.)

Telsa is certainly the stock about which to talk these days: according to Bloomberg, the 619% rise is great in itself, but Tesla’s stock has increased 15-fold since the company’s stock exchange debut in June 2010.

And this from analyst Brian Johnson at Barclays Bank investment arm, who said the “gigafactory” was reminiscent of Henry Ford’s push for vertical integration in the 1920s. Yes, that is some transformation.

But there’s another wrinkle to the Tesla/Panasonic plan: according to Bloomberg, it could also transform the power industry, a prospect even more spectacular than its potential to promote electric cars. The agency points out that utility customers throughout the U.S. are already beginning to turn to battery storage as a way to reduce power bills and sever ties with their local power companies. By lowering the cost of energy-storage with its lithium-ion batteries, “Tesla could accelerate the disruption of the electric utility business”, said Bloomberg. Each of the Tesla batteries could store enough energy to power a house for 3.5 days. Recharging would obviously be a lot cheaper than taking mains power for all of those 3.5 days.

That would be a game-changer.

Now to China, where the electric car story is not quite so rosy. According to Caixin, most electric car charging stations in Beijing, Shanghai, Tianjin and other major cities are now seriously under-used or idle. The report says the problem is weak demand for electric cars, a lack of technical standards for their production, and other problems which are frustrating the government’s “new energy” policy. The report contrasted the scene at Shenzhen Bao’an International Airport at the beginning of Spring Festival: it said “thousands of taxis” queued on the roadway leading to the terminal building. But “just 500 metres from the crowded taxi stand, the airport’s electric car charging station stood silent. Not a soul was in sight”.

Shenzen-based electric vehicle make BYD sold only 3,125 battery-operated cars nationwide in 2013. In its own home town, only 80 taxis are using BYD’s E6 pure electric cars. The makers of electric vehicles have been kept going by the demand from public transport operators, with more than 25,000 electric and hybrid buses on the roads.

In April 2012 the Ministry of Science and Technology said it wanted 500,000 electric and hybrid cars on China’s roads by 2015, five million by 2020. Many companies spent big to build charging stations, but have lost money as many remain largely unused.


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Comments

  • Veritas Bob

    Robin, is “Recharging would obviously be a lot cheaper than taking mains power for all of those 3.5 days” your own commentary? I didn’t see it in the Bloomberg article I saw.

    What is this basis for this statement? That people charge their batteries using their own solar generated power, as opposed to using power from the grid? Of course, there is capital cost, and perhaps some maintenance cost, associated with solar generated power, so it’s not obvious to me why is it obvious that recharging would e a lot cheaper than taking mains power for all of those 3.5 days.

    There has long been discussion that sometime down the road, electric car batteries can/will be used as storage for the grid, and that utilities may be able to remove and pay for energy from private electric vehicle batteries, as well as charging them.

    March 3, 2014 - 8:15 AM

  • Sue Glover

    Great article Robin. Fascinating to watch the developments here… wish I had Tesla stock a year ago 🙂

    March 3, 2014 - 10:51 AM

    • Veritas Bob

      Sue, I’ve been looking for a broker who lets me make retroactive investment decisions. Please let me know if you find one. I’d even be willing to pay somewhat higher commissions.

      March 3, 2014 - 10:54 AM

  • vacuum

    re: energy storage …
    double price of AXPW this week. It has Pb+C batteries, old school tech revised. AVC.v getting a little lift this week also.

    March 8, 2014 - 2:47 AM

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